Legislature(1993 - 1994)
04/01/1993 09:30 AM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE April 1, 1993 9:30 a.m. MEMBERS PRESENT Senator Randy Phillips, Chairman Senator Robin Taylor, Vice Chairman Senator Loren Leman Senator Al Adams Senator Fred Zharoff MEMBERS ABSENT None ALSO PRESENT Senator Judy Salo COMMITTEE CALENDAR SENATE BILL NO. 62 "An Act relating to the public school foundation program; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 62 - See Community & Regional Affairs minutes dated 2/18/93. WITNESS REGISTER Duane Guiley, Director School Finance Department of Education 801 W. 10th St., Suite 200 Juneau, AK 99801-1894 POSITION STATEMENT: Offered information on CSSB 62(CRA) ACTION NARRATIVE TAPE 93-18, SIDE A Number 001 The Senate Community & Regional Affairs Committee was called to order by Chairman Randy Phillips at 9:30 a.m. SENATOR RANDY PHILLIPS introduced SB 62 (PUBLIC SCHOOL FOUNDATION PROGRAM) as the only order of business. He explained the meeting was being teleconferenced in a listen- only mode, and that public testimony would be taken the following week. He then directed attention to a draft committee substitute. Number 040 SENATOR LEMAN moved that CSSB 62(CRA) be adopted for the purpose of discussion and markup. SENATOR ADAMS objected. A hand vote was taken with the following result: Senators Leman, Taylor and Phillips voted "Yea"; Senators Adams and Zharoff voted "Nay." The Chair stated the CSSB 62(CRA) was adopted for discussion purposes only. Number 057 SENATOR RANDY PHILLIPS presented the following overview on the main components of the proposed committee substitute: Concerns with the Alaska School Price Index (ASPI) (Deleted from bill) The ASPI has a fundamental flaw. One of the purposes given by the legislature passing HCR 23 in 1992 asking for rewriting the foundation formula was to encourage schools to be fiscally responsible. The ASPI does the opposite. The ASPI is based on the actual costs incurred by school districts in 1988-89 and 1991-92. This could reward those school districts that were poorly managed and penalize those districts that have worked to keep their costs in line. Concerns with the funding change int he gifted program and vocational education. (Deleted from bill) The current law rewards those districts that have programs for gifted and talented students. The original version of SB 62 gives gifted and vocational education funding for all school districts based solely on student population. There is no incentive for any school to use these funds whether for a gifted and talented program or for vocational education. Additional funding for schools should be tied to the programs that the schools operate. Local Contribution (Section 1 of CS) Under the current law, local governments must contribute the lesser of 4 mills or 35 percent of basic need. All except three school districts pay 4 mills, three school districts pay 35 percent of basic need at a mill rate much less than 4. This bill will improve taxpayer equity by requiring these wealthier districts to make a larger contribution. Minimum size of funding communities (Section 2 of CS) While all students are entitled to an education provided by the state, it is not reasonable to operate schools that are below a certain size. Currently, schools with as few as five students are being funded with costs as high as $122,000 per student. Under this proposal students would like have the following options: district correspondence; state correspondence; and state boarding school. Changing the divisor in the large elementary school formula (Section 3 of CS) This change benefits students in all schools with more than 525 elementary students. Currently, the formula recognizes the economy of scale for larger schools. However, smaller class sizes for elementary students have been shown to be important no matter how large the school district is. Single site funding formula (Section 4 of the CS) Additional funding for single site school districts has not been addressed in the formula. Each year, the single site schools come to the legislature for additional funding. Some years there has been concern about political manipulation of funding for these schools. This section establishes a formula for the additional single site funding. Number 138 DUANE GUILEY, School Finance Director, Department of Education, referring to Section 1 of the committee substitute, said currently, under the 35 percent requirement versus the proposed 50 percent requirement, the North Slope School District, in the past, has been able to meet their 35 percent requirement with as little as four tenths of one mill local contribution equivalent as compared to the other districts that must make the required four mill local contribution. The effect of the change will raise their equivalent millage requirement although it still does not approach the four mills. Turning to Section 2, Mr. Guiley related that the Board of Education this year approved action through regulation that would eliminate funding communities that have less than 10 students by the year 1999. This would affect 20 existing schools statewide. The change in Section 2 to less than 25 students has the potential to affect 71 schools statewide. Changing the elementary divisor as provided in Section 3 would award an additional unit of funding for each group of 16 students as opposed to the current group of 17 students. In Section 4, the single site number goes up to an average daily membership size of 900. It includes additional districts, and now, rather than having 22 single site districts, there will be 24 single site districts. The amendment will also remove any reference to hold harmless. Number 193 SENATOR TAYLOR noted that he is very concerned about the committee substitute and that he is going to have a lot of questions on it. Number 205 SENATOR ADAMS asked Mr. Guiley if he had a chart showing the wealth per student throughout the school districts. DUANE GUILEY acknowledged that he did and said he would provide it to the committee. SENATOR ADAMS also requested that the fiscal note be broken out per sections. Number 220 SENATOR ZHAROFF said he has concerns with Section 1 and if it meets the disparity test and if the whole bill is in conformity with the federal regulations as well. He is also concerned with the elimination of schools with 25 students or less, which will have a definite impact on a number of the rural schools. Another concern is changing the divisor in the large elementary school formula in Section 3 and if it is also meeting equitable funding for all students in the state. Number 250 SENATOR LEMAN said he would like to hear if students' education would be jeopardized if they have to be on centralized correspondence. Number 260 SENATOR SALO asked if by deleting the Alaska School Price Index it has the effect of returning to the existent formula in regards to the area cost differential. DUANE GUILEY acknowledged it would. With the deletion of the section referring to the Alaska School Price Index, the fiscal note that the department calculated was based upon the current area cost differential as it exists in statute. Responding to Senator Zharoff's concern with Section 1, which requires the 50 percent local contribution as opposed to the existing 35 percent, Mr. Guiley said this should not have any effect on our disparity test, in that the units generated by these specific schools are eliminated under the current state law. Number 298 SENATOR RANDY PHILLIPS invited the committee members to come up with their recommendations at the next hearing on the bill. Number 305 SENATOR ZHAROFF requested that the members be provided with a breakdown on other sources of funds that are allocated to the school districts, a breakdown for pupil transportation and reimbursement for school indebtedness, etc. There being no further business to come before the committee, the meeting was adjourned at 9:52 a.m.